CFA Exam

• There are three exams you must pass: Level I, Level II, and Level III.

• Candidates preparing for the exams report spending an average of over 300 hours of study time on each exam.

• Most candidates take 4-5 years to pass all three levels of the CFA exam.

• There are 10 topic areas tested to varying degrees on each exam.

• CFA test question formats include multiple-choice questions, vignette-supported multiple-choice questions, and vignette-supported open-ended essay and numerical questions.

• The CFA exam is notoriously difficult, but proper preparation greatly increases your chances of passing.

• The average CFA exam pass rate is 44%, however, Level I has the lowest pass rate at 41%.

The CFA exams consist of three levels (i.e., Level I, Level II, and Level III) that test 10 topics in varying depth. The exam questions require different levels of topic mastery including knowledge, comprehension, application, analysis, synthesis, and evaluation of the material.

The 10 topic areas tested on the CFA Exam are:

Students who passed the exams report studying, on average, just over 300 hours per exam (so, over 900 hours of total study time for the three exams). Keeping this in mind and given a rather high failure rate, it’s unsurprising most candidates take 4-5 years to pass all three levels of the CFA exam.

Given the high failure rate, most students use a CFA review course to pass all three levels of the exam.

Each level of the exam has different question formats, and each level tests the exam topics at varying weights. The curriculum for each exam progressively builds on the information tested on the prior exam, and the questions become more complex (but don’t worry, pass rates for later exams are higher than earlier exams).

The CFA exams cover most of the topic areas across all three levels, however the focus for each level changes as the exams progress. To pass the CFA Level I Exam, you’ll want to focus primarily on investment tools and ethical and professional standards.

Level I CFA Exam Format

The Level I CFA exam curriculum focuses on investment tools and ethical and professional standards but covers all topic areas to some degree. This first level is all multiple-choice questions, and the 4.5-hour exam is divided into two equal sessions with an optional break between sessions.

• CFA Level I, First Session: 90 multiple-choice questions (2 hours and 15 minutes)

• CFA Level I, Second Session: 90 multiple-choice questions (2 hours and 15 minutes)

Level I CFA Exam Questions

There are a total of 180 free-standing, multiple-choice questions on the Level I CFA exam. CFA Institute recommends budgeting about 90 seconds per question to get through the exam with enough time. If you get stuck on a question, make an educated guess, and move on. There is no penalty for wrong answers, so don’t leave any questions blank.

Level I CFA Exam Questions Topic Weight

Overall, the CFA Level I exam will establish a baseline of knowledge and comprehension. It’s a well-balanced introduction to the topic areas with a focus on recalling formulas and definitions from memory.

Understanding topic weights is an essential building block for your study plan. Be sure to check out our helpful article on CFA Level I topic weight to help you build a proper study plan to prepare for the exam.

Anyone with experience will tell you; the CFA Level II Exam is a different prospect than you’ll have experienced on Level I. It takes you a step further from the content you may have studied previously into a specialist territory and to pass, you need to make sure you’re prepared and focused.

Level II CFA Exam Format

The Level II CFA exam curriculum has the potential to focus on financial statement analysis, equity investments, fixed income investments, ethics, and portfolio management and wealth planning.

The Level II exam consists of vignette-supported multiple-choice questions, and the exam is 4 hours and 24 minutes long divided into two equal sessions with an optional break between sessions.

• CFA Level II, First Session: 44 vignette-supported multiple-choice questions (2 hours and 12 minutes)

• CFA Level II, Second Session: 44 vignette-supported multiple-choice questions (2 hours and 12 minutes)

Level II CFA Exam Questions

There are a total of 88 vignette-supported multiple-choice questions on the Level 2 CFA exam. Questions are divided into “item sets” with 4 or 6 multiple-choice questions related to a short, descriptive scenario (i.e., vignette) from which information will be drawn. Candidates then apply tools to analyze the data. Just like on Level 1, there is no penalty for wrong answers, so don’t leave any questions blank.

Level II CFA Exam Questions Topic Weight

Overall, the CFA Level II exam will test application and analysis with a focus on asset valuation. Level II builds on Level I by having candidates apply their knowledge of standards to situations that analysts face.

For Level III, time management is critical and every minute counts. The CFA Level III Exam exam is unlike anything you’ve experienced in the CFA program before, so understanding how the exam is structured and how to approach it is essential for a passing score.

Level III CFA Exam Format

The Level III CFA exam curriculum focuses on fixed income investments and portfolio management.

The Level III exam is comprised of vignette-supported multiple-choice items and constructed response questions. The exam is 4 hours and 24 minutes long and is divided into two equal sessions with an optional break between sessions.

• CFA Level III, First Session: 8 to 11 vignette-supported essay sets with three different possible types of responses: essay, numerical entry, and multiple-choice (2 hours and 12 minutes)

• CFA Level III, Second Session: 44 vignette-supported multiple-choice items with either 4 or 6 questions worth 3 points each (2 hours and 12 minutes)

Level III CFA Exam Questions

There are a total of 52-55 vignette-supported questions on the Level 3 CFA exam. The first session is considerably different than the other two exams with 8-10 vignettes followed by an essay or constructed response. The open-ended nature of these questions may require candidates to perform calculations, evaluate situations, or select an answer from multiple choices and then construct a reason for the choice.

The second session has questions similar to Level II with a total of 44 vignette-supported multiple-choice questions. Unlike the other exams, Level 3 requires more analysis, synthesis, and evaluation of the facts. There is no penalty for wrong answers, so answer every question.

Level III CFA Exam Questions Topic Weight

The CFA Level III exam will heavily test portfolio management and wealth planning (35-40% of the exam) followed by a focus on fixed income (15-20%), equity investments (10-15%), and ethics (10-15%). It does not test quantitative methods, financial statement analysis, or corporate issuers.

The CFA exam is objectively hard, but that’s not because it’s impossible to pass, it’s because it covers so much information and takes so long to study for. Each exam calls for over 300 hours of study time, so that’s a commitment of around 1,000 hours when it’s all said and done (if you pass each exam on the first try).

The pass rate for each level of the CFA exam ranges from 41%-53%, but if you come prepared, you will likely fair better than the average. If you study for 350 hours for each exam, take mock exams, and get enough sleep, you significantly increase your chances of passing.

How Hard Is the Level I CFA Exam?

The Level I CFA exam is considered very hard—it has the lowest average pass rate after all—but that’s likely because candidates underestimate the amount of time needed to prepare. CFA Institute reports that, on average, candidates that pass Level I of the CFA exam recounted spending 303 hours studying. Compared to Level II and Level III, Level I is typically considered the “easiest” because it consists of all multiple-choice questions and tests memorization.

How Hard Is the Level II CFA Exam?

The Level II CFA exam is a step up in difficulty from the Level I exam because it introduces vignette-supported questions and requires candidates to apply and analyze tested concepts. CFA Institute reports that candidates that passed Level II of the CFA exam in June 2019 spent an average of 328 hours studying.

How Hard Is the Level III CFA Exam?

The Level III CFA exam is typically considered the hardest of the three exams (though some candidates maintain Level II is the hardest). It introduces open-ended question answer formats and evaluates the candidate’s ability to make good judgment calls. Level III has the highest average pass rate of the three exams (53%), and CFA Institute reports that candidates that passed Level III in 2019 studied for an average of 344 hours.

The 10-year average pass rate for the CFA exam is 44%. Yes, this pass rate can be a bit daunting, and yes, the CFA exam is notoriously difficult. But if you give yourself enough time (over 300 hours) to study with the right CFA prep course, you can be part of the passing percentage.

Level I CFA Exam Pass Rate

Level I of the CFA exam has the lowest pass rate, with a 10-year average of 41%. Unfortunately, recent pass rates came in even lower, likely due to COVID-19 and resulting testing schedule disruptions. Pass rates are expected to recover, but if you do fail Level I, you can always retake the exam.

• CFA Level I 10-year Average Pass Rate: 41%

If you want to learn more about the history of CFA exam pass rates, be sure to read our latest article on Level I CFA® Program Exam Pass Rate Hits Record Low.

Level II CFA Exam Pass Rate

Level II of the CFA exam has a slightly higher pass rate than Level I, with a 10-year average of 45%. Level II recently saw a similar dip to Level I because of COVID-19 disruptions.

• CFA Level II 10-year Average Pass Rate: 45%

Level III CFA Exam Pass Rate

The Level III CFA exam consistently has the highest pass rate of the three levels, with a 10-year average of 53%.

• CFA Level III 10-year Average Pass Rate: 53%

Retaking the CFA Exam

If you fail part of the CFA exam, you first need to give yourself grace. It’s a difficult exam, failure isn’t permanent, and there are many successful CFA charterholders and investment professionals who didn’t pass each exam on their first try.

Second, you should start planning your next attempt right away. CFA candidates must have at least 6 months between exams, so if you fail a level, you will have to wait 6 months to retake it.

But that’s ok because it gives you maximum time to review your exam results, brush up on where you fell short, and review the rest of the material. When you sign up to retake your exam, you will have to pay another exam registration fee of $700 – $1,000.

The time, effort, and expenses that go into retaking an exam are not ideal, so make sure to prepare as best you can the first time around.

When you decide it’s time to start your CFA certification journey, here are the steps you should take to prepare for the CFA exam.

1. Decide when to take the CFA exam

Choosing your CFA exam date will depend on how much time you have to study. If you can only budget 25 hours for studying each month, you’ll want to schedule an exam one year out. If you can study for 50 hours per month, you can schedule an exam 6 months out. Give yourself ample time—most candidates take 4-5 years to pass all three levels of the CFA exam and preparation is key.

The Level I CFA exam is offered four times (February, May, August, and November).

2. Register for the CFA exam

CFA exam registration is a two-part process. First, you will need to enroll to take the CFA exam on the CFA Institute website and pay the one-time $450 enrollment fee and the exam registration fee ($700 for early registration or $1,000 for standard registration). Second, you will need to schedule your exam via your CFA Program tile by the scheduling deadline.

3. Budget time for studying

Now that you have your exam scheduled, outline your study schedule. Either budget 350 hours of study time per exam, or at least shoot to hit the average study hours of candidates who passed the exams (303 hours for Level 1, 328 hours for Level 2, and 344 hours for Level 3).

4. Invest in the right supplemental course materials

CFA Institute study materials should not be your only study resource—the information is just too extensive and dense. Invest in a CFA prep course, like UWorld’s CFA Program Exam Review, that condenses the information into manageable 30–45-minute lessons. UWorld’s program also provides invaluable video instruction, questions for review in the appropriate exam format, and drill down knowledge tools as you approach exam day.

5. Expect to do well on the CFA exam

The CFA exam is notoriously difficult and, yes, the pass rate is daunting. But if you prepare properly (study for over 300 hours, use UWorld study materials, get enough sleep, etc.) you are setting yourself up for success, and you should feel good about that. Try to have positive expectations and anticipate doing well on the exam.